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May 19, 2010

U.S. Trade Representative Releases Special 301 Report on Global IPR

At the end of last month, the U.S. Trade
Representative, Ron Kirk, issued the 2010 Special 301 Report, which according
to the USTR website "reflects the Administration's resolve
to encourage and maintain effective [Intellectual Property Rights (IPR)] protection and enforcement worldwide"
by identifying "a wide range of serious concerns, ranging from troubling 'indigenous
innovation' policies that may unfairly disadvantage U.S. rightsholders in
China, to the continuing challenges of Internet piracy in countries such as
Canada and Spain, to the ongoing systemic IPR enforcement challenges in many
countries around the world."

The
Report is promulgated pursuant to Section 182 of the Trade Act of 1974, as
amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay
Round Agreements Act (enacted in 1994). The Trade Representative is
required under the Act to "identify those countries that deny adequate and
effective protection for IPR or deny fair and equitable market access for
persons that rely on intellectual property protection." The Trade
Representative has implemented these provisions by creating a "Priority
Watch List" and "Watch List." Placing a country on the
Priority Watch List or Watch List is used to indicate that the country exhibits
"particular problems . . . with respect to IPR protection, enforcement, or
market access for persons relying on intellectual property." These
watch lists are reserved for countries having "the most onerous or
egregious acts, policies, or practices and whose acts, policies, or practices
have the greatest adverse impact (actual or potential) on the relevant U.S.
products."

This report, on the state of intellectual property
rights worldwide, identifies eleven countries on a "Priority Watch List"
and another 29 on a "Watch List," all relating to deficiencies in
intellectual property protection in these countries.The Priority Watch List of the report lists China, Russia,
Algeria, Argentina, Canada, Chile, India, Indonesia, Israel, Pakistan,
Thailand, and Venezuela; the only country not on this list that was on the list
last year is Israel. (Israel's status is "pending" in the
Report, which states that "Israel has entered into an understanding with
the United States whereby it will address key outstanding IPR issues").Countries on this list "do not
provide an adequate level of IPR protection or
enforcement, or market access to persons relying on intellectual property
protection." The Report "identifies a wide range of serious
concerns, ranging from troubling 'indigenous innovation' policies that may
unfairly disadvantage U.S. rights holders in China, to the continuing
challenges of Internet piracy in countries such as Canada and Spain, to the
ongoing systemic IPR enforcement challenges in many countries around the world.

The Report notes that public response to a Federal
Register Notice used to prepare the Report showed a "significant increase"
over the number of responses filed in 2009, and provides access to these
comments (www.regulations.gov, docket
number USTR-2010-0003) as well as the testimony of 23 witnesses at a public
hearing.The Report
notes some "positive accomplishments," including "improved
efforts by trading partners the Czech Republic, Hungary, and Poland," all
of which are not on this year's Watch List.

The Report discusses initiatives to strengthen IPR
internationally, including the World Trade Organization, bilateral and regional
initiatives, the Anti-Counterfeiting Trade Agreement, trade preference program
reviews and "expanded international communication" efforts.It also outlines international trends
in counterfeiting and piracy "involving the mass production and sale of a
vast array of fake goods, including items such as counterfeit medicines, health
care products, food and beverages, automobile and airplane parts, toothpaste,
shampoos, razors, electronics, batteries, chemicals, and sporting goods."It notes that there are a "greater
diversity in the types of goods that are being counterfeited, as well as the
production of labels and components for these fake products," and a "rapid
growth in the piracy of copyrighted products in virtually all formats, as well
as counterfeiting of trademarked goods."The Report also discusses Internet and digital piracy,
facilitated by "increased availability of broadband Internet connections
around the world."These
concerns are specifically noted in Brazil, Canada, China, India, Italy, Russia,
Spain and Ukraine, including unauthorized retransmission of sporting events
particularly in China and the Netherlands.The Report also sets forth as a "growing area of
concern" trademark infringement of country code top level domain name
extensions.

As it did last year, the Report contains a section
on "Intellectual Property and Health Policy," specifically relating
to the 2001 Doha Declaration on the TRIPS Agreement. The Report states
that the U.S. "respects a country's right to protect public health, in
particular, to promote access to medicines for all." Accordingly,
the Report states that the U.S. "respects our trading partners' rights to
grant compulsory licenses" consistent with the provisions of the Doha
Declaration, including provisions of the August 2003 agreement whereby
countries are permitted to grant such compulsory licenses not only for
producing pharmaceuticals for internal use but also for export to countries
unable to produce drugs themselves. Accordingly, the Report states that
the U.S. "will work to ensure that the provisions of our bilateral and
regional trade agreements are consistent with these views and do not impede the
taking of measures necessary to protect public health." On the other hand, the Report contains a
section outlining the USTR's efforts to "reduce market access barriers
faced by U.S. pharmaceutical and medical device companies in many countries,"
specifically calling out Japan, Poland, Algeria and Indonesia as countries of
particular concern in this regard.

The Report contains in a final section a review of
U.S. activities in the WTO to resolve disputes with countries such as China and
the EU over trade issues.

Section II of Report is a detailed,
country-by-country discussion for each country on the Priority Watch List and
the Watch List, relating to the activities (or lack thereof) of each country
that results in placement of that country on these lists.Section III of the Report identifies "notorious
markets" for places in the world where "[g]lobal piracy and counterfeiting
continue to thrive."These
include several websites (TV Ants, B2B and B2C websites in China, Webhards in
Korea, Allofmp3.com clones in Russia) and physical markets (Baidu, Lowu Market,
Silk Market and Yiwu in China;
Bahia in Ecuador, Greenhills, Quiapo,
Binondo, Makati Cinema Square, and 168 Mall in the Philippines; Gorbushka and
Rubin Trade Center and Savelovskiy Market in Russia; Harco Glodok in Indonesia;
Petrivka Market in Ukraine; Panthip Plaza, the Klong Thom, Saphan Lek and Baan
Mor shopping areas, the Patpong and Silom shopping areas, the Mah Boon Krong
(MBK) Center, the Sukhumvit Road area, Nehru Place, Palika Bazaar, Richie
Street, Burma Bazaar Manish Market, Heera Panna, Lamington Road, the Mumbai
Fort District, and Chandni Chowk in India; Tepito, Plaza Meave, Eje Central,
Lomas Verdes, Pericoapa Bazaar, San Juan de Dios, Simitrio-La Cuchilla, and
Pulgas in Mexico; La Salada in Argentina; and the Tri-Border Region between
Paraguay, Argentina and Brazil).

The U.S. Trade Representative Report provides
insights into both the concerns of U.S. IP rights holders and the Administration's intentions to work with, cajole, coerce, or threaten other
countries to increase protection for IP rights of U.S. IP rights holders. Western governments have been frustrated, particularly with regard to
pharmaceutical products, in implementation of international trade treaties
designed to increase IP rights protection. As in earlier years, the
Report is in some ways the answer to the question, "What are we going to
do about it?" So far, the
honest answer seems to be "not enough."

For additional information regarding this and other related topics,
please see: